According to IHS' report, Netflix's share of U.S. online movie revenue skyrocketed to 44 percent in 2011. This is a significant jump from Netflix's share in 2010, which was less than 1 percent.

Apple, on the other hand, had its total revenue drop to 32.3 percent in 2011. This was a pretty big decrease from 60.8 percent in 2010.

"We're in the midst of a significant change in the way people pay to consume movies online," said Dan Cryan, research director for digital media at IHS. "All the significant revenue in the U.S. online movie business in 2011 was generated by rental business models, which provide temporary access, not permanent ownership. Rental delivers unlimited consumption with a low monthly fee for older titles as well as cheap rentals of new releases, providing the kind of value that online customers want. In contrast, EST, which is much more profitable for studios on a per-transaction basis, is stuck in the doldrums."

Despite the fact that Netflix and Apple both represent different ends of the market and offer different products (SVOD services tend to have older titles while transaction VOD services have newer titles as well as older titles), they share a common interest in hardware. Netflix is available on various devices like game consoles, smartphones, tablets, etc. ITunes is also available on many devices, but mainly benefits Apple by being the proprietary media player program for Apple products.

The report also showed that all U.S. transactional VOD revenue grew 75 percent from $155 million in 2010 to $273 million in 2011. SVOD revenue far surpassed this number, hitting $454 million in 2011 from only $4.3 million in 2010. This put SVOD in the lead, and with Netflix being the king of SVOD services, Apple was knocked down a peg.

Source: IHS Media Relations

Comments

Threshold

Username

Password

remember me

This article is over a month old, voting and posting comments is disabled

I recall reading that Steve Jobs hated its Apple TV but I wonder to what degree that he let it be released to the public? He couldn't have hated it that much.

But I think the killers are that 1080P started to become the norm as Apple released a 720P device while others were starting to do 1080 streaming although quality of that stream is judgmental without starting a BLU-RAY vs 1080P video stream argument. Also lot of legacy HDTV's don't support the 720P resolution natively and a lot couldnt upscale/downscale it. Add in competing devices with much more freedom of streaming selection (Roku/Boxxee/WDTV). Then eventually nearly every HDTV and BLU-RAY player has built in ability to connect to video streaming services. On top of the fire you have the Wii, PS3, and X-Box 360 tagging in video streaming services that are already in millions of homes and then why would someone buy an Apple TV just to add Apple TV to their selection of already available video streams? I have at least 5 devices in my house that can get Netflix streamed to them and they arent devices made just for Video streaming.

For Apple TV to grow they should have sold the service like Netflix and allowed TV and BLU-RAY companies to incorporate it like Netflix, hulu, mlb,.tv, Amazon channels.

This is one area where selling specific hardware is the failed method.

All of these devices in my home have Netflix and other various streaming services.

Wii, X-Box 360, Sony BLU-RAY player, LG BLU-RAY player, Toshiba HDTV.

Practically every BLU-RAY player I see has Netflix and more built in and your going to buy a BLU-RAY player for your HDTV. Just like many people bought a PS3 because of the BLU-RAY ability now the PS3 has movie streaming services.

The question is why would I give Apple $99.00 just add their streaming service?

I think they should make it a channel like Netflix, Hulu, Crackle, and Amazon and let it get incorporated into other devices. This would increase their user base and if you want some additional functionality that the Apple device offers then you might commit to the $99.00 device they offer. Most people just want to play the movie and I see no reason to give Apple $99.00 to add their streaming service which is just one more streaming service to the dozens I already have access to because they are built into the devices I purchased. Its a waste of another input.

Probably but Microsoft just dropped a ton of enhancements to the X-Box 360 including Music Service, Tablet Streaming and controlling, 4 ESPN channels including Monday Night Football, NBA, and a ton of other enhancements. With 67 Million X-Box 360's out there and a low price tag its hard to choose Apple TV over a 360.

There's just way too much wrong with Apple TV to type it all out here. It's a truly failed product. If it wasn't branded as an "Apple" device, I dare say it would have a third of the sales it got.

Yeah I really want to buy something that's sole purpose is to deliver iTunes to my living room! Umm wrong. I think it's been established at this point that only idiots use iTunes.

Now you make a great point Mitch. Netflix made the right choice by offering a service, NOT proprietary hardware to run the service. I'm pleased to see this report because Netflix is an amazing service with an insanely cheap price point, and I'm a very happy customer. I wish them continued success.

That's weird cos only an idiot would say the sole purpose of Apple TV is to deliver iTunes into the living room when the article already states that Netflix is directly available via the device with no other software or hardware required.

It's actually a very good and versatile product but don't let your irrational hatred get in the way of presenting anything as meaningless as the odd fact or two.

You would be INSANE to buy Apple TV just for Netflix. It's outclassed in EVERY way by the cheaper Roku boxes and the WD Live TV Plus blows it out of the water.

Versatile compared to what? Sorry but not a single respected reviewer on the planet has called Apple TV "versatile". In typical Apple fashion it's the most locked down option on the market. The list of things you CAN'T do on an Apple TV far surpass those you can.

quote: "The downsides with Apple TV continue to be what they were in the previous version. There's no support for some of the other up and coming video streaming services like Vudu (who offers up to 9 Mbps 1080p streaming) or Hulu or countless others. In addition there's no easy way to simply play back things from an AFP network share, and probably never will be. Apple hasn't crafted a pirate-friendly box with Apple TV, and until the Apple TV 3 gets jailbroken and XMBC port, it just isn't a fit for that crowd at all."

This is like claiming that some SanDisk player will crush the iPod, because the SanDisk player can handle some long list of formats.

Apple is not, and never has been, interested in lists of specs. They are interested in crafting a coherent user experience which some (not all) people will pay good money for.

If you insist on claiming that spec lists represent the one true way to choose consumer electronics, and that no-one of any sense would buy an Apple TV because it can't play some irrelevant or obsolete format, well, what exactly are you demonstrating to the world? You utter obliviousness to the last decade? Your complete unwillingness to ever learn anything?

quote: Apple is not, and never has been, interested in lists of specs. They are interested in crafting a coherent user experience which some (not all) people will pay good money for.

Great point- the problem is that Apple entered a market where differentiation just makes thing a bit superfluous.

UI designs have been simplified (and perhaps oversimplified) for the average user for ages in the set top market. Even Microsoft beat Apple TV to market with a solidly designed, enhanceable WMC interface that integrates devices including PS3.

There was nothing for an Apple experience to contribute except for iTunes and perhaps connectivity with Apple devices; and iTunes can be put on any PC, while the demand for Apple devices in any serious home theater setup is extremely understated as they don't appeal to the theater geeks who are interested in a list of specs.

Where Apple usually opts to be the center of the experience in a market (iPhone, iPad, iPod), the Apple TV is really a sad tertiary device. In this case, had they designed a receiver, they might have done better.

Are you talking about features in software or hardware though? I don't want to spend hours faffing about with clever media centre settings, I just want to find stuff that I'd like to watch and watch it without hassle.

On that basis there is little to choose between the devices out there until you add extra features such as integration on top and the Apples solutions come out on top for me personally as I just can't be bothered to mess around getting things working anymore like I used to.

The whole point of a streaming box is to be able to deliver maximum content to your television. If all you want to be able to do is watch Netflix and iTunes syncing, congrats, Apple TV is for you. But to claim this is "versatile" and a good option is just false.

Only an Apple fan or an ignorant person would choose the Apple TV. Sorry but those are the facts. Objectively it's very hard to make an argument for purchasing one. Instead of telling me how I'm wrong, why don't you wow me with the Apple TV's features?

quote: I think it's been established at this point that only idiots use iTunes.

iTunes is awesome for music. It's DRM free and there are no competitors to iCloud. Google Music is terrible. I have my music on my home server linked to my iCloud account and I can stream that music to ANY other computer or iOS device that is connected to the internet. It's great.